Nido, Kairiki oil well hopes dashed

Hopes for a large oil discovery in the Philippines by
Nido Petroleum
and
Kairiki Energy
have been dashed after the Gindara-1 exploration well found water instead of oil or gas in the main target section.

Optimism about a positive result at the well in the North Palawan Basin had been running high, particularly after Royal Dutch Shell decided in January to partner in the drilling in the SC 54B licence, taking the bulk of the cost burden away from the two Australian junior explorers.

But late last week Nido, the operator of the venture released drilling reports that suggested the well had not been successful.

Nido confirmed in a statement on Monday that the deeper section of the well, in a high-quality limestone reservoir, found water. It said that the lower porosity upper section could hold gas and a thin oil column but that these were not considered to be commercial.

Estimates of the volume of oil possibly to be found at Gindara topped 600 million barrels of oil equivalent, and potentially up to 1 billion barrels. Nido had estimated the chance of exploration success at the well at 40 per cent, more than double the industry average.

The news has slashed the market values of both Nido and Kairiki

Nido shares were down 16 per cent in early trading on Monday after slumping 39 per cent on Friday. Kairiki shares slid 30 per cent early Monday after crashing 67 per cent on Friday.